Montgomery County, MD Mandates Affordable Homes

She means the shiny key to her new home in Montgomery County, a suburban biotech hub 10 miles north of Washington that’s home to the National Institutes of Health.

Lantion, 45, recently became a first-time homeowner in Clarksburg Town Center, a new development with traditional brick architecture that reflects the town’s 250-year-old heritage.

From the outside, Lantion’s three-story townhouse with three bedrooms and 3 1/2 baths looks much the same as those of her neighbors in this upscale subdivision, where homes are selling for $500,000.

Lantion paid $157,569.

That’s because Lantion, a single mom who works two jobs to pay the mortgage and put her two children through college, became a first-time homeowner thanks to Montgomery County’s affordable housing program.

“I could never afford my own home on a single parent’s income,” said Lantion, who divorced in the 1990s when her children were young. “It was always a struggle. I had medical bills, trying to keep up the car payment, coats for winter, money for school lunches, class trips, food on the table… “ Her voice trails off.

“But now I have the most precious metal in the world,” she said, fingering the townhouse key. How a single parent earning $40,000 a year can afford to own a new home in Montgomery County — one of the 20 richest counties in the nation — is a story that starts more than 30 years ago.

Today Palm Beach County is grappling with the same issue: Ensuring that middle-class working people such as Lantion can afford to buy a house.

Some are calling for the county’s political leaders to take the same tough steps as Montgomery County in requiring developers to build affordable houses.

In 1973 — faced with spiraling home costs, zoning laws that favored high-end developments and civic pressure — the Montgomery County Council passed a law creating the Moderately Priced Housing Program. It was the nation’s first program giving builders incentives to include affordable houses in their developments, and requiring them to do so.

The county executive vetoed the law, saying it was invasive public policy and impossible to administer. The county council overrode the veto and affordable housing in Montgomery County became the law of the land — literally — in 1974. The affordable homes were labeled MPDUs for Moderately Priced Dwelling Units, a verbal shorthand that’s still used today.

In the ensuing 30 years, the affordable housing program never has been challenged in court.

“They did it the right way,” said David Flanagan, president of Elm Street Development, a McLean, Va.-based developer who builds homes in Montgomery County. “They sat down with builders to come up with a program where it wasn’t a drain on the building community.”

The program, often called “mandatory inclusionary zoning” because it requires builders to include affordable houses in their developments, has produced nearly 12,000 affordable homes, about 7% of the county’s housing stock. The law kicks in for developments of 20 homes or more and requires 12.5% to 15% of the houses to be affordable for families earning about 70% of the area’s median income.

“We price the homes for the starting schoolteacher’s salary,” Councilman Steven Silverman said. The maximum income for buyers ranges from $44,000 to $68,000, depending on family size.

In return for building affordable homes, developers get a density bonus of up to 22%. This amounts to free land for the affordable houses and for the extra market-rate homes.

Here’s how that works: If the underlying zoning would allow a developer to build 100 homes, in exchange for building 15% of them as affordable housing the developer would get the maximum density bonus of 22%. That means he could build 122 homes, 15 being affordable housing and seven bonus homes sold at market rate. That’s no small change in a county where the median price of a new home has more than doubled in the past five years to $666,540.

“When we build 122 units, we’ve got 15 that we don’t make any money on,” said Flanagan, who has built hundreds of affordable houses among his portfolio of houses costing as much as $2.2 million. “Hopefully, we don’t lose money, either. We recover our costs with the seven that we make more money on. It’s a program that works very well.”

Because demand for affordable housing is so great, the homes are sold through a lottery system. There are typically about 1,200 families on a waiting list for 250 affordable new homes each year. Despite the mandatory affordable housing law, demand has far outpaced supply.

“Our initial MPDU law was done when land was available and everyone was building,” Councilman Silverman said. “Now we’re 80% built out, and the large swaths of land where you could build 400 houses — and get 60 MPDUs — are gone.”

There are other challenges to the program, including oversight. The affordable housing lottery is on hold, for instance, while the county council investigates irregularities in the planning department that were brought to light by a local civic group.

Holding on to the affordable homes also is a problem.

The resale price is controlled for 30 years. But nearly two-thirds of the county’s affordable housing stock is no longer affordable because price controls have expired, said Tedi Osias, director of legislative and public affairs for the Housing Opportunity Commission of Montgomery County, a state-chartered housing finance agency.

The commission can buy up to one-third of the affordable houses in a development, turning them into rentals for low-income families. This adds to a community’s diversity, said Barbara Galloway, property manager for the commission, which manages 1,600 houses spread over 500 square miles.

Studies have shown that affordable housing doesn’t lower the value of market-rate homes, Silverman said. And there’s been no complaints from buyers who pay full price while their neighbors in affordable homes pay a fraction, the housing commission’s Osias said.

In single-family-home developments, builders are allowed to erect townhouses as the affordable units. You have to look closely, though, to notice that the affordable house on a street of expensive brick homes in Claggett Farms in the area of the town of Potomac is actually a duplex, with front and side entrances.

Or drive the streets of the new subdivision that’s home to first-time buyer Lantion and you might observe that the affordable townhouses are narrower and shorter. They also have fewer rooms, lower-grade carpeting and cheaper appliances. You can’t tell that from the outside, though, and that’s the goal.

Sometimes, however, the affordable houses are easy to spot. In the nearby Avenel development, they’re obviously the 60 Cape Cod-style cottages clustered together, separate from the rest of the subdivision. “We try to avoid that,” Osias said quietly. And yet these cottages represent a victory of sorts for affordable housing.

Avenel is a ritzy development in Potomac with multimillion-dollar estate homes and a private golf course — set amid rolling green hills and white picket fences — that has hosted a men’s professional tournament. Avenel’s developer offered to give the county $4 million to let him put his affordable housing someplace else. In a major test of inclusionary zoning, the developer wanted to keep his community exclusive.

The concept makes Elizabeth Davison, the powerful head of the county Department of Housing and Community Affairs, visibly bristle. Davison administers the affordable housing program and reviews developers’ requests for alternative compliance measures.

“There’s a stereotype about people who live in MPDUs,” Davison said. “In reality, they’re middle-class working people with cars and good incomes. This is not public housing or welfare.”

The county was tempted by Avenel’s buyout offer but ultimately said no.

“Some people think they’ve earned the right to live in exclusive communities,” Davison said. “If there isn’t that opportunity, it makes it harder for them to maintain their prejudices and their excuses.”

One of the unintended benefits of Montgomery County’s affordable housing program, lauded by urban planners around the globe, is that communities have become racially and economically diverse because affordable housing is dispersed throughout the county.

The Montgomery County model also eliminates the granddaddy of objections to affordable housing, that old battle cry: “Not in my back yard.”

After all, there’s no NIMBYism when affordable housing is in everyone’s back yard.